Is Facebook Inc. (FB) Doomed To Die Or Will They Stand The Heat? [STUDY]

2013 was marked as a historic year for the social media industry with many crucial events taking place, like the social media titan Facebook Inc. (NASDAQ:FB) surpassing the epic revenue mark of $2 billion in Q3, 2013, the micro-blogging site Twitter Inc. (NYSE:TWTR) making a dream IPO debut with its share price shooting 73% higher on day-1 from the initial price of $26 (Currently, the share price is trading more than double the IPO price), Snapchat confidently rejecting pricey offer of Facebook and Google Inc. (NASDAQ:GOOG) due to its potential growth prospects and a whole lot more. The social media titan Facebook has seen 2013 as a year with a lot of hiccups – After 9+ years of constant efforts in grabbing 1.189 billion active users, they finally started collecting hefty revenues from advertisers, they even fared well in their undiscovered mobile product (Mobile Facebook), but at the same time steered the competition away from rival niche sites (Pinterest, Tumblr and Twitter), messenger apps (WeChat, WhatsApp, Viber and Line) and attracted a large number of teens, shifting to alternate platforms due to privacy and other issues.

Is Facebook Losing Its Charm Or Is The Competition From Niche Sites Too Much To Bear?

Although, this year was quite eventful (positively) for many networking sites in terms of revenue growth, stock prices and acquisition offers, still, it marked the start of a POSSIBLE decline of a major giant like Facebook. Many analysts are drawing speculations around the possible end of the social media giant in the next 8-10 years. Mark Zuckerberg’s prediction of exponential rise in sharing of stories by people in the future is hardly helping Facebook. Story-sharing is undoubtedly rising at a booming rate, but on platforms other than Facebook. If we compare engagement rate of Facebook in terms of likes and shares, both have registered a scintillating rise by 67% and 94% respectively in the last 1 year (Facebook Likes increased from 2.7 billion in May 2012 to 4.5 billion in May 2013 & Facebook Shares increased from 2.45 billion in August 2012 to 4.75 billion in May 2013). But there are a lot of other niche sites which have grown at a much faster rate than Facebook and are clinching the type of sharing and interaction which the social media giant (Facebook) would have loved to own, with its vivid range of products.

According to Facebook PMD Gigya, Facebook accounted for 41% of all social sharing in Q3 of 2013, a significant drop of 9% (from 50%) compared to Q2 of 2013. People prefer niche sites which provide a better experience and an in-depth knowledge related to their purpose of site visit. (Twitter – for news, LinkedIn Corp. (NYSE:LNKD) – for professional networking, Pinterest- brand engagement, messenger apps – personal interaction.

Facebook privacy is one of the prime concerns for teens worldwide, according to an article by Business insider, Facebook during its Q3 report release had reported that there has been a considerable drop in teenage active user base. A survey of younger teens in the U.K, outlined the fact that the presence of parents or elderly people from whom teens wish to hide, have all crowded on to the Facebook platform to keep a watch and remain connected with their siblings, hence teens don’t find it to be a platform worth hanging, due to lack of privacy. Teens prefer interacting with their friends via messaging apps and blogs on Tumblr or Twitter.

In an article on Entrepreneur.com, Jay Yarow said that – Facebook is fundamentally a broken product which is collapsing under its own weight. The rise of dedicated mobile sharing apps has created a grave threat to Facebook. Not just that, the amount of spam has increased considerably in the last one year. The amount of spam on YouTube and Facebook combined in comparison with other sites is in ratio 100:1. Spammers often use the personal data of users by posting spam links which users click unknowingly. Facebook contains highest number of phishing attacks and personally identifiable information.

Niche Sites Are Growing Popular!

Niche sites are growing famous as they consist in-depth details and requirements of a particular type or purpose with which the users visit the website. For example, LinkedIn is mainly for professional networking and serious business related discussions, hence job seekers and businessmen prefer using the network for serious discussions. Knowledge seekers and speakers raise their opinions and questions on Quora and other discussion platforms where users present are of similar interest groups.

Pinterest, although has a mere 70 million users, nearly 80% of its overall content is shared content (in the form of re-pins), which is the main essence (sharing) of any social networking site. People love engaging with their favorite brands on the Pinterest platform, nearly 92% of people claimed that their holiday shopping became less stressful due to Pinterest. Initiatives like Holidays giving guide, Holiday Gifts feed, Related Pins, soothing images of pin-boards have really attracted people worldwide to discuss and engage with people with similar interest areas about their experience, opinion and exchange ideas via images.

Although, Facebook revised its news feed algorithm to promote news media publishing firms higher in ranking, it is hardly a close match to Twitter in terms of viral spreading of hottest breaking news to nooks and corners of the planet. People across the globe post more than 5700 tweets/sec and especially during television hours, more than 263 million tweets were composed by the U.S twitter users alone.

Instagram with its attractive vintage images has attracted more than 150 million users worldwide and successfully replenished stranger-to-stranger social connector arena via photos. Photo image lovers are increasingly shifting their focus on Instagram. Yahoo Inc.’s (NASDAQ:YHOO) Tumblr has managed to create buzz amongst the teens in developed states due to better privacy compared to Facebook.

Unable To Withstand Competition From Messenger Apps?

If we consider person-to-person or person-to-group chat, messenger apps like WhatsApp, WeChat, Viber, Line and Nimbuzz have revolutionized the personal interaction front. WhatsApp (300+ million), WeChat (400 million), Line (260 million ), Viber (200 million), Nimbuzz (150 million) and other messaging apps have successfully stolen the thunder from Facebook and grabbed over a 1.3 billion user-base till now. WhatsApp, WeChat and other apps are easy to install and they have a vast collection of emoticons, smileys, videos and audio messaging feature, they consume little data for communication and moreover they are all ad-free platforms. Hence, teens are increasingly getting attracted towards messenger apps more than social media sites.

Measures Taken By Facebook To Cope Up With The Users’ And Advertisers’ Related Issues – Did They Actually Work?

Facebook has initiated crucial moves in answering sophisticated demands of advertisers by introducing specific ad targeting options based on location, age, sex, based on browsing history (cookie based ad targeting), custom audience based on contact details of consumer base and a lot more. Facebook even introduced dark posts to help advertisers test their posts before publishing on their brand page, they also improved analytics insights of ad success reports. Even in the mobile section Facebook successfully revised their mobile technology and increased referral traffic to websites by a whopping 253%, and overall referral traffic skyrocketed by 170%, according to shareaholic. Facebook also revamped its news feed to promote more relevant articles to users based on their engagement activity.

Above mentioned measures are undoubtedly vital, but they have backfired on Facebook in many ways. Although we say that people do love to interact with their brands on Facebook but very few of them visit the site for the same purpose, people seldom love interacting with cheeky and over the top entertaining ads, a majority of their time goes in uploading their photos, counting likes, shares, stalking others’ pictures, and status updates. The news feed revamp has created a fear amongst advertisers regarding the ranking for their paid ads. Another major concern for Facebook is UVR factor (User base Versus Revenue Factor) – Advertisers from developed states (the U.S and Canada) are spending in bulk and they account for nearly 46% of Facebook’s revenue, whereas the active user-base tally from these states is just 16.7%. Hence, this factor is likely to cause hindrance to advertising investment from brand marketers in future.

Conclusion

A social networking site having over 1 billion active users, which consumes 15.8% of total minutes spent on the internet, is not easy to tackle or bring down. Somewhere down the line, maybe within a decade or so, Facebook might face – doomsday. The competition and trend prevailing is out claiming the fact that users are looking for a CHANGE. Down the line in 9-10 years, the social media titan might vanish from the list of top networking sites unless they come with a earth shattering move to bring back the lost user-base and attract new ones.

Lastly, one important point which we have observed in the recent past is that web users around the globe are frequently switching to different networking platforms. Especially, whenever the social media sites start monetizing their hard-earned efforts of gathering users and providing them innovative ways to connect with people worldwide. Not just Facebook, every social media site must work on the fact to balance between monetizing initiatives and user experience. Else no social media site might sustain longer than a decade.